This is a very polarizing time! At first I was not even sure I wanted to talk or write about this topic. People are hurting, some have lost loved ones, some people such as doctors, real estate investors, and syndicators are business as usual. So that means liability and risk. Which is my job as a high risk asset protection and litigation attorney.
COVID- 19 is a very big concern and investors and businesses need to understand how it will change and impact their business, employees, customers, brand, operation, and revenue going forward. There is simply no doubt that global health emergencies and financial crisis and pandemics create great risk to wealth. Very few of us are positioned to handle it, let alone benefit financially from it. For most of us, it can devastate us if we do not proactive plan.
Weather the Storm
The key in any crisis is to weather the storm. What is obvious is that if income goes down, without expenses going down in the same amount, you will start depleting assets. Income during this time is most likely not yet under your direct control in a crisis. What you do have some control over is your expenses. What is very critical is your assets because they will give you the ability to subsidize your reduced income and ride out a crisis.
The sad thing is that we now have to add liability cause by COVID-19 to the list of things that investor and business owner need to plan for. These are difficult times for us all, and we are all doing the best we can to take care of our family and loved ones. We are practicing social distancing and cleaning our hands. And security becomes critical. You also want your assets and equity safe. You want to protect your future and legacy.
What we are talking about in Legal Bar Associations and the Litigation arena is a concern of a substantial rise in casualty claims, employee claims, and other organization claims. For example general liability claims alleging negligence from failing to protect a customer or an invitee, especially if a death is involved. And that liability can extend to family members, not just the employee. Such as an employee coming in contact with the virus and then passing it on to a family member. Or casualty insurance claims for negligent acts. The government has also talked about indemnifying certain companies from liability who are mass-producing the needed medical supplies that hospitals are short on. This indemnification is something we’re still monitoring.
Negative Coverage From Insurance Industries
We are also preparing for the likely possibility that the insurance industry may experience negative coverage as some carriers are already excluding COVID-19 from general liability coverage from employers due to the classification of it as an epidemic and global emergency. Also, insurance companies are now considering excluding the coronavirus from employer’s liability coverage all together. This is a massive shot in the foot to casualty claim insurance that you would think might cover you for negligence, or to cover the medical expenses for the people involved including your employees or their family members. But now you are personally on the hook.
By the World Health Organization (WHO) classifying COVID-19 as a global health emergency, employer’s liability coverage will most likely not apply. So you again may be personally on the hook.
How Asset Protection Can Help
What Asset protection does is it creates the legal barriers that you will need. It levels the playing field if you are attacked. What you need to do as Investors, Syndicators, Land-Lords, General Partners, High-Risk Professionals or HNW families is talk to an asset protection attorney and practice conservative and preventative protective planning and set up a system before you need it. Don’t wait for an attack to happen.
A few of the steps that you should take are to recognize if your income is reduced and your expenses are not, that will shorten the amount of time you can meet obligations. (Income + Assets) – (Debts Service + Expenses) = Time (you can weather a crisis).
Next, you need to take steps to protect your hard assets because they are critical to giving you the ability to weather the storm. You cannot afford to let a creditor decide how to use your assets.
The final step is to create a plan. FIRST, reduce your expenses quickly and efficiently. But don’t handicap your business to the point that you are not even giving yourself a chance to evolve and thrive. Go through what is critical and what is not. These first few steps you can do yourself. The second step is legally securing your assets and protecting them from having a claim attached to them. This second step is “Asset Protection” and involves using a professional. The sooner you do both steps, the more effective they will help you.
Also, Some questions to think about and ask yourself are:
- Do you have employees located or traveling to areas where there have been documented and diagnosed cases of COVID-19
- Does’ your business increase the probability of employees exposed to infected individuals?
- Do your employees work in close proximity with vendors or other partners who may have employees at greater potentials to contract COVID-19?
If the answers to any of those questions are yes, then come up with a potential contingency plan in how you are managing your business to mitigate these claims or its impact. To help protect your organization from COVID-19 liability it is going to be necessary for every business to fully examine how they are doing business and interacts in relation to employees, and third parties, and also in relation to your premises. Try to strip away potential negligence. And then have a properly drafted Asset Protection Plan as your backup plan.
So while you are at home with your family and spending time with your loved ones, I hope you are also spending time reading a few good books, working on yourself, working on your business and thinking about the different strategies that might work for you to protect what you got.
By: Brian T. Bradley, Esq.
HNW – Asset Protection Attorney as featured on:
- Simple Passive Cash Flow Podcast by Lane Kawaoka https://www.youtube.com/watch?v=-omB8-jY_7k
- Old Dawg’s REI Network https://podcasts.apple.com/us/podcast/old-dawgs-rei-network-with-bill-manassero/id1116214379?i=1000467856776
- Multifamily +Marketing https://podcasts.apple.com/us/podcast/target-market-insights-multifamily-marketing/id1269346577?i=1000467672539